Posts Tagged ‘Ministry of Health Labor and Welfare’

On Feb. 13, a Labor Policy Council sub-committee submitted to the labor ministry a report with suggestions for a bill to revise the labor standards law. The revision, which the ministry plans to submit to the next regular Diet session, applies to the work of skilled white collar professionals and will allow them to “work in a manner that demonstrates their achievements” more effectively, which is another way of saying that employers will no longer be required to pay these workers overtime for extra hours on the job, which in turn means that employers cannot be accused of pressuring them to work overtime for no pay, a system popularly known as saabisu zangyo, or “free overtime.”

Ostensibly, the revision will affect a small portion of the labor force, since it will only apply to workers who make at least ¥10.75 million a year, mainly foreign currency traders, financial analysts, consultants, etc.

Burning the candle at both ends.

According to the advisory panel’s recommendations, if a company wants to utilize this new overtime system, it must reach an agreement with the targeted workers and somehow introduce rules that will guarantee the employees avoid overwork as much as possible by, for instance, making sure they don’t work weekends.

The panel also recommends another revision to so-called sairyo rodosei, the “discretionary labor system.” Under to this system the worker and his employer decide together how many hours the former will work and how much pay he will receive based on those hours. If the two parties believe that in order to accomplish his tasks he may occasionally need to work longer hours, then those hours and appropriate compensation should be incorporated beforehand into his wages. But if the worker works even more hours than the overtime covered by the extra wage, he will not be paid extra in accordance with the new system, though there may be special conditions for after-midnight and weekend work.

This system targets sales agents, researchers, legal workers — people who tend to require flexible hours since the size of their work load varies in accordance with the nature of a specific project. The whole point, according to the labor ministry, is to peg pay to achievement.

An report in Tokyo Shimbun points out that there is more to the proposed bill than the two revised overtime systems. The ostensible purpose of the revisions is to prevent “overwork,” so the sub-committee also recommends a law guaranteeing a minimum number of paid vacation days a year, even for management employees; and that overtime rates be increased for employees of small and medium-sized companies to those already being paid by large companies.

With regards to workers on flextime systems, overtime should be paid for any hours that exceed 50 in a week, and employees with small children should be better able to set their hours in order to address parenting contingencies.

These changes sound progressive, but representatives of labor groups who participated in the sub-committee discussions expressed serious reservations about their direction, saying they may actually have the opposite effect and lead to overwork. They may even exacerbate karoshi (death from overwork), something the revisions are supposed to prevent.

To the labor side, the current system of stipulating a normal workload as being five days a week, eight hours a day, with any extra hours worked as qualifying for overtime pay, should remain unchanged. The problem is that it isn’t enforced strictly enough. By deregulating the current law, there is a danger that workers will be pressured even more into working longer hours.

The government has countered by saying that cutting the relationship between wages and work hours will lead to greater economic activity and should even mean shorter work hours. The management representatives on the sub-committee added that a “broader choice of working styles” will mean greater productivity and thus more sustainable economic growth.

The main problem is that there is no definition of what qualifies as “achievement.” For sales agents, it may not be a problem since they have sales targets, but what about researchers? For the time being, the new changes will only affect about 100,000 workers, but in 2005 the Japan Business Federation (Keidanren) said they wanted this kind of “zero-overtime” system for all workers who make over ¥4 million, which is about 40 percent of the white collar workforce.

They’ve since reduced it to 10 percent of the workforce, but obviously they aim to increase that portion. And as one labor lawyer interviewed by Tokyo Shimbun explained, the discretionary labor system already in effect has led to longer hours, so a revised system may simply make matters worse.

But the real issue is how these revisions affect wages. According to a study by Mitsubishi UFJ Research (pdf), the average “fixed wage” (shotei-nai kyuryo) has remained the same since 1995, mostly due to changes in the makeup of the labor force, which now includes more part-time and regular workers than there were 20 years ago. That means any increase in pay for the average worker comes from bonuses (tokubetsu kyuryo) or overtime pay (shoteigai kyuryo).

As the English nomenclature suggests, bonuses are paid at the discretion of the employer, usually as a reflection of either the company’s business achievements or the individual worker’s. However, in Japan, employees consider bonuses to be part of their salary, as do consumer markets. Banks take bonuses into consideration when extending loans. Mitsubishi found that in 1995, bonuses accounted for 22.9 percent of the average pay of workers who received them, and that now bonuses make up only 18.5 percent of their yearly pay. Since salaries have remained flat during that interval, it means overall pay has actually decreased.

The only way a worker can make more money over time is thus to work extra hours. Mitsubishi found that overtime pay increased steadily through the mid-2000s as the Japanese economy grew, and then dropped suddenly with the onset of the recession in 2008. In recent years, as the economy improved, overtime pay has increased.

That means overtime pay is a better index of economic achievement than salaries or even bonuses, but it doesn’t mean workers are benefiting from better corporate performance, since they are contributing to it with more time spent on the job. When Mitsubishi evaluated industries that tend to demonstrate low productivity, it found that workers also tend to work longer hours, which is particularly conspicuous for young workers, who may need more time to finish projects, and higher-income workers, whose higher incomes are a direct function of working more overtime.

According to Organization for Economic Cooperation and Development statistics, in the United States, which leads the world in per person hours worked with 1,790 a year, part-timers, who are defined as working less than 35 hours a week, make up 13 percent of the labor force, while in Japan, which is second with 1,745 hours a year per person, part-timers make up more than 20 percent of the labor force. That means full-time employees are working more hours than their American counterparts, and Mitsubishi reports that the average number of hours worked by full-time regular employees in 2013 was 2,022.

Though companies have demanded the zero overtime revision in order to increase productivity, their main goal is to reduce personnel costs. If that’s the case, then the revision flies in the face of the government economic recovery strategy, which is to boost corporate profits that will in turn boost wages and consumption. If overtime is cut, then workers lose the only recourse they have — at the moment, at least — for wage growth. Moreover, in order to fulfill work loads that will be used to judge performance they may have to work more hours without pay.

Preemptive stride: If you do have metabolic syndrome you can guess what the doctor will tell you to do

Though there’s a minority opinion to the contrary, conventional wisdom says that regular health checkups are the only way to prevent the development of major illnesses, so, logically, they should also help reduce healthcare costs in the long run. This is the concept behind tokutei kenko kensa, or “special health checkups,” that were started six years ago by the Ministry of Health, Labor and Welfare. The main target is metabolic syndrome, the inevitable gain in fat that accompanies midddle age and which, unchecked, is thought to be the gateway to many so-called lifestyle diseases, like diabetes.

The idea is that local governments would provide checkups to insured residents between the ages of 40 and 74 with national insurance, which, in principle, doesn’t cover regular general health checkups since Japan’s public health system is designed to treat existing problems. If the special checkups uncover unhealthy situations, then the individuals are advised with regard to better diets or exercise regimens, or even pharmaceutical assistance, so as to head off costly treatment down the road, like, for instance, dialysis, which can cost on average ¥5 million a year, most of which ends up being paid for by the government, both local and central.

This document was sent out several years ago after the government discovered that it had lost the pension payment records of 50 million people. The document would be used to help locate those records. The program was expensive, but very few people responded.

The Ministry of Health, Labor and Welfare has announced that starting in April it will “take action” to increase the “collection rate” of national pension premiums, specifically those for kokumin nenkin, the obligatory pension plan for the self-employed and those who otherwise don’t belong to the company-supported kosei nenkin pension system. According to Tokyo Shimbun the idea is to send warning letters to individuals whose incomes are more than ¥4 million and who haven’t contributed for at least 13 consecutive months.

Presumably, the next step will be for the ministry to start siezing assets. The initial criteria would target approximately 140,000 pension scofflaws. Eventually, however, they will go after everyone who hasn’t paid, and since it is estimated that close to 3 million people who should be paying into the system haven’t been for at least 24 months, the job seems daunting if not impossible.

There are many reasons for this delinquency, but the main one has to do with the system itself. Basic pensions apply not only to the self-employed, but anyone who is employed part-time or on a contract basis, meaning their employers don’t pay into the kosei nenkin system. It also includes the unemployed, because according to the law every adult who lives in Japan must belong to the system, whether they work or not. And the premiums are the same, regardless of income or lack thereof: right now ¥15,250 a month (it goes up gradually every year).

The ministry assumes that about 90,000 people who should be “members” are not, and that number is probably higher, but in any case, excluding those who are exempt from paying (very poor, disabled, etc.), the rate of payment into the kokumin nenkin fund was only 59 percent as of 2012, and that portion continues to decline.

In a 2011 government survey, the number one demographic of delinquents was the unemployed, which is easy to understand. However, 28 percent of delinquent payers had part-time jobs, and they said they didn’t make enough to pay. Moreover, 22 percent of the so-called deadbeats were self-employed or working in their families’ businesses. Overall, 74 percent of those who said they couldn’t pay gave their reason as “can’t afford the premiums.” The percentage is increasing because the number of non-regular employees is also increasing.

But the government says that 10.5 percent of households whose income exceeds ¥10 million have also failed to pay their fair share, and it’s these people they are citing first. After that, 17 percent of households with incomes of between ¥5 and ¥10 million are delinquent. Both of these seemingly solvent income brackets say in surveys that they, too, cannot afford the premiums due to “financial difficulties,” but there is also a considerable number who refuse to pay simply because they “don’t trust the system.”

The pension system’s fairness has always been a point of contention. As it stands, if a person pays his fair share for 40 years, the maximum monthly payment he receives at 65 will be ¥66,000, which is not enough to live off of. The main concept behind kokumin nenkin when it was first devised was that the self-employed would still have income from their businesses or the sale of their businesses when they retired. Not only is that not necessarily true, but the bulk of basic pension members are non-regular employees who have nothing else to fall back on when they retire, unless they’ve saved and invested, which is unlikely.

Also, everyone in Japan must also pay into the national health insurance plan, which for most people takes priority since anyone can get sick at any time, but you only retire when you get old. Then there are people with some money who have bought life insurance annuity plans that give them some income when they retire. They may not see the point in paying double for a pension, so they don’t bother paying nenkin.

But the most discouraging aspect of the system is that in order to receive even the minimum payment at retirement, which is less than ¥30,000 a month, you have to pay into the system for at least 25 years. Regardless of one’s mathematical skills, it doesn’t take much calculating to understand that paying ¥15,000 a month for 25 years for a pension that will be so low one will have to apply for supplemental welfare (which is increasingly the case) is not worth it.

What’s particularly maddening about the government’s refusal to acknowledge reality is that it continues to throw money at the problem. Tokyo Shimbun estimates that for every ¥100 that the ministry will collect with its new hardline policy starting in April, it will spend ¥90. In real terms, the ministry has budgeted ¥5.3 billion for “forced collections.” Also, according to the law, it can only make delinquents pay up to two years retroactively, and if the individual has been delinquent for much longer than that the individual may wonder, “What’s the point?,” since he can only receive a pension if he’s paid for a full 25 years.

There is no sense to the system, especially when you consider that the Democratic Party of Japan wanted to change it to something more rational, and made the Liberal Democratic Party promise to revise the system when it gave up the reins of government in December 2012. Since then the LDP has done nothing, because it believes that any change would be unfair to the people who have paid into the system properly all along. Famous last words.

Last fall, the labor ministry inspected 5,111 companies they suspected might be burakku kigyo, or “black companies,” meaning enterprises that violate labor standards, usually with regard to working hours. The ministry found that more than 80 percent were, in fact, guilty of some kind of misdemeanor in their treatment of employees, with 44 percent violating overtime rules and 24 percent not paying extra wages for overtime work at all. All the major media reported the investigation but, as is always the case with such revelations, no companies were identified.

Tokyo Shimbun, however, did interpolate the findings in an interesting way by offering a useful tip to young job-seekers: A good criterion for determining whether or not a company treated its employees fairly was the way it handled paid vacations. As it stands, Japan, among all the major industrial economies in the world, has the lowest rate of workers taking paid vacations — on average only 47 percent of full-time regular employees.

In France, Germany and the U.K., almost 100 percent of full-time workers take paid leave, probably because it is legally mandated. In the U.S., where there is no law guaranteeing paid vacations, the rate is between 70 and 80 percent. The usual reason for Japan’s low showing in this regard is the structure of the workplace, where employees are expected to take full responsibility for their positions, meaning that when they take time off they have to ask other employees to cover their tasks, thus giving those employees extra work.

This can cause bad feelings among co-workers, which is why in Japan everybody takes vacations at the same time. In other countries, tasks tend to be shared within departments or sections, so if one person takes off his job can be covered by several people.

Nevertheless, Japan does have rules governing vacation time. After six months on the job, a new employee, whether full-time or part-time, must be allowed 10 days of paid vacation if he or she has worked at least 80 percent of all his employer’s business days during those six months. Then, for every subsequent year the employee remains at the company, he or she gains one extra paid day off. The labor ministry survey found that the average white collar worker takes 8.6 days of paid leave a year. In addition, a survey by Rengo, the Japan Trade Union Federation, found that 23 percent of workers took no vacation at all, while another 24 percent took up to only 2 days.

According to an article published last November by the weekly magazine Shukan Post, with pressure mounting from the government to increase salaries in line with the Liberal Democratic Party’s economic recovery plan, some companies are looking at paid vacations as a means of meeting these goals, by paying employees extra for the time they don’t take off.

At present, this is against the law. In 1955, the practice of “buying” paid vacations was outlawed because, according to a professor interviewed by Post, Japan was just entering its high-growth period and there were labor shortages, so businesses could afford to buy workers’ vacations since consumer demand was so high. The government realized that workers could easily be exploited.

The Post suggests the government legally allow companies to buy vacation time since workers themselves have said they are willing to sell such time if they receive “the proper compensation.” Companies now can legally compensate for unused vacation time when an employee quits or retires, so changing the law wouldn’t be that difficult.

In any event, the magazine reports that many companies already buy vacation time under the table, though they often pay only the equivalent of the minimum wage. The magazine figures that since a 45-year-old university graduate makes on average ¥18,500 a day, he could demand ¥185,000 extra for not taking his mandatory 10-day vacation. That extra money would add about ¥15,000 more to his monthly pay, which by itself isn’t going to boost his pay enough to provide the stimulus the government wants, but it’s something.

Take this job and…: Want ads targeting part-timers for specific shifts at a Chiba Prefecture supermarket

When the government determines the success of Abenomics it has to take into consideration wage inflation, not just price inflation, since real growth can’t be sustained without both. Nevertheless, all wage inflation isn’t created equal.

A recent article in the Asahi Shimbun cited results of a regular survey conducted by Recruit Jobs, an employment-related research institute. In the major metropolitan areas of Japan the average wage offered to part-time food service workers in want ads in November was ¥930, which is 1.3 percent higher than the average amount offered in November 2012. More significantly, this year-on-year increase has been continuing for 25 consecutive months, the longest stretch of increases since the institute started tracking such numbers in 2007.

The standard wage in the restaurant industry is relatively low to begin with, and right now there is a shortage of help nationwide, so Recruit says employers are being forced to offer more money. One example cited by Asahi is a new mall that just opened in Makuhari, Chiba Prefecture, which contains a number of eating establishments, most of which belong to chain operations. Starting wages at these restaurants is between ¥1,200 and ¥1,300 an hour, which is even higher than they are in Tokyo. According to an official at Four Seeds, a company that owns several restaurant chains, more large retail facilities, such as shopping malls, are being built in an around major metropolitan areas, so there is greater demand for food service workers.

However, these numbers are misleading in terms of indicating whether or not the economy as a whole is on the mend. For one thing, the labor ministry says that just because part-time wages in major cities are going up, it doesn’t mean they’re rising for the rest of Japan.

The ministry found that in October, the average monthly take-home for “short-hour part-timers” was ¥94,634, which is 0.4 percent lower than it was in October 2012, and marked five straight months of year-on-year declines. And if the average pay for a part-timer in this industry in 2010 was set at 100, then the salary this year is 98.7.

Despite the fact that the national minimum wage was raised recently, average part-time income is dropping, mainly because companies are hiring more people to work short hours. For instance, the coffee shop chain Pronto targets housewives (which they call “mistresses”) in their 30s and 40s with the promise that they don’t have to work weekends and holidays. In addition, they can take off up to nine full weeks, without pay, of course, in a given six-month period. These women don’t work more than 20 hours a week, and the company likes it because under these conditions they can easily find women willing to work for low pay at short notice.

This trend is also prevalent in the supermarket industry, where employers pay housewives slightly more to work in the morning and the evenings since most housewives prefer only working in the afternoon when they don’t have household responsibilities.

In Tokyo, many food service companies offer higher wages only for peak demand periods to fill short-term staffing shortages. Other times they offer less money. The turnover is high, but this strategy allows the companies more options in controlling personnel costs on a month-to-month basis.

The point is that these workers supposedly want to work shorter hours, and the more people there are working shorter hours for slightly more pay, the more the statistics will reflect higher wages overall, but in truth the pay is just being distributed among more people, meaning per capita wages aren’t going up at all.

Of course, food services is traditionally considered an entry-level or temporary job, not a career track job, but as manufacturing continues to shift overseas, it is an industry that will become more vital as an employer. It’s not quite at the stage that it is in the U.S., where many fast food workers have to support families on what they make, but it might be getting there.

As long ago as the early 1980s the health ministry made it a priority to get more people to undergo cancer screenings in order to detect the disease at its earliest and easiest-to-treat stages. By 2009, the goal was to have 50 percent of the targeted adult population receive annual tests for five types of cancer — colon, stomach, breast, uterus, lung — by 2012. That goal was not reached, so they moved it back another five years, but since the overall screening rate at present is still somewhere between 20 and 30 percent, it doesn’t appear the ministry is going to achieve that goal either.

I’ll take one from column A, and…: Cancer screening menu distributed by local government (click to enlarge).

According to an article in Asahi Shimbun, the main obstacle is income. A center for adult diseases in Osaka analyzed surveys carried out by the health ministry and found that the higher a person’s income is, the more likely he or she is to undergo cancer screenings. In fact, screening rates have a direct correlation to the public health insurance program a person is enrolled in. For instance, 48 percent of males enrolled in the Kyosai Kumiai insurance program receive colon cancer screenings. The rate drops to 38 percent for a man in the Kumiai Kenpo program, 27 percent for one in the Kyokai Kenpo program, 19 percent for those who use regular kokumin hoken (national insurance), and only 13 percent for people on public assistance, who get their insurance free.

Kyosai Kumiai members are national and local civil servants, including public school teachers, whose average income in 2009 was ¥2.36 million. Kumiai Kenpo is insurance for companies with 100 or more companies, of which the average member makes ¥1.95 million. Kyokai Kenpo is for companies with less than 100 employees. Their average salary is ¥1.39 million. Regular kokumin hoken is for part-timers, pensioners and the self-employed, who average ¥910,000 a year. People on welfare, of course, don’t have income.

Cancer checks are managed by local governments, who set up screenings at public facilities or cooperating hospitals and clinics, usually for limited periods at specific times of the year. The Osaka center found that part-timers, the self-employed and workers at smaller companies usually cannot take time off whenever they want to, and thus are less likely to be able to go to the facility when the screenings are being conducted, usually on weekdays. Moreover, they may not have the money to pay the nominal fees for the screenings, which can cost anywhere from a few hundred yen to ¥2,000 or more. Even though welfare recipients get free insurance, they have to pay these fees as well. And there’s a fee for each screening, so if you are a woman and undergo all five of the tests recommended it could cost as much as ¥10,000. And there are lots of tests for other types of cancer, each of which requires a fee.

Killing with kindness? Caregiver helps elderly woman into her apartment

Ever since the government launched the kaigo hoken system in 2000 to provide nursing care services for seniors, the health ministry reviews revenues and expenditures every year and adjusts them accordingly. What this means is that every year premiums go up, which makes sense since the number of seniors is increasing while the population in general remains static or shrinks. In 2000, 15.6 percent of the population was 65 or older. In 2011 the same demographic accounted for 21.4 percent of the population.

Starting at age 40, every resident of Japan pays kaigo hoken premiums, the amount determined by age and income. Even seniors who are eligible for and receive kaigo (nursing care) services pay premiums. They also bear 10 percent of the cost of their care. As each year passes, the burden gets heavier. In 2000, the average monthly premium for people 65 and older was ¥2,911. This past April, that amount breached ¥5,000, and it’s sure to go up. The baby boom generation will turn 75 in 2025, when it is estimated that the cost of kaigo hoken services, including the 10 percent that seniors bear, will total somewhere between ¥19 and ¥23 trillion. That’s twice the cost of such services in 2012. Consequently, average premiums for seniors will be more than ¥8,000.